Buyer Beware: Cut-Rate Test Strips for Sale

A common concern among people with diabetes is the cost of medical supplies, particularly test strips. These tiny technological marvels play a critical role in diabetes self-care by allowing people to measure their blood glucose anytime and anywhere, providing a window into the impact that medications, physical activity, and food choices have on health. But these small wonders can be a big expense for people who don't have insurance coverage or whose coverage doesn't meet all their strip needs. The demand for affordable test strips has fostered a test-strip gray market in which people resell their strips, often through a third party, for a fraction of the retail cost.

Demand

The over-the-counter price for test strips can be around $1 per strip for some of the more popular brands. A quick search on Craigslist in September revealed that one could easily find "2 sealed boxes of 50 strips. Exp 10/2013. $40" or "2 boxes of … Test Strips, 50ct. Use by 11/30/2013. 25.00 per box firm, call Kay." Searching for "test strips" on eBay yielded around 5,000 hits priced, in most cases, well below retail.

So why wouldn't you want to buy half-price strips from "Kay" or on eBay? A June letter to the Food and Drug Administration (FDA) from Sue Kirkman, MD, the American Diabetes Association's senior vice president for medical affairs and community information, outlines several reasons to be concerned about the increasingly active underground market in test strips. Opportunities to resell strips are "incentivizing financially strapped people to sell their test strips rather than use them to maintain their health," the letter says. What's more, there is risk to the buyers, who may not know what they are getting.

Sarah Clark-Lynn, an FDA spokesperson, notes that "it is critical that the strips are not expired and [are] stored correctly (as labeled) because if they have been stored incorrectly (e.g., at extreme temperatures) they could give inaccurate results." Even if boxes are sealed and the strips unexpired, it's virtually impossible to verify that gray-market strips have been stored correctly. In the FDA's response to the ADA's letter, the agency says it has needed to "intervene in certain operations over the past few years, especially when the test strip storage and handling practices … are less than ideal." The FDA has taken action against companies selling strips that are expired, stored incorrectly, or counterfeit.

Pharmacies, too, are concerned about the alternative test-strip market. "Customers should only purchase health care items, including diabetes products such as test strips, from trusted sources such as licensed pharmacies," according to a statement from CVS/pharmacy. "The risk of purchasing these items from secondary online sources is that the safety and quality of a product cannot be verified. In fact, in many cases such products were obtained by resellers illegally through organized shoplifting rings."

Another problem is that consumers can unwittingly purchase counterfeit strips through these unregulated sellers. In 2006, the FDA alerted people to strips labeled as LifeScan products that were actually fakes and gave inaccurate readings. "We are very careful to source only product that comes from the manufacturer, as there is a lot of 'bad' product in the pipeline," says Michael Wolf, PharmD, of Walgreens.

Fraud Alert

Be on the lookout for fraudulent phone calls from scammers targeting people with diabetes and falsely claiming to be from Medicare, other government agencies, or diabetes organizations, including the American Diabetes Association. The scammer may offer free diabetes supplies in exchange for personal or financial information. The caller then bills Medicare for the items, according to the Department of Health and Human Services' Office of Inspector General.

To combat fraud, check your Medicare bills and summary notices for charges for items you did not order or receive. If you receive items that you did not order, refuse delivery or return them to the sender, while making note of the date and the sender's name. If you suspect fraud, report the incident to law enforcement by calling 1-800-HHS-TIPS (1-800-447-8477) or online at oig.hhs.gov/fraud/hotline.

Supply

It is not technically illegal to resell over-the-counter test strips unless they are expired, according to the FDA's Clark-Lynn. What about unexpired strips purchased through private insurance, Medicare, or Medicaid? A clear answer is surprisingly difficult to uncover. "We don't know of any law forbidding it," says Donald McLeod, a Centers for Medicare & Medicaid Services (CMS) spokesperson, given that the seller received the strips legally. However, if a person is receiving excess supplies and doesn't notify suppliers, he or she could be considered as knowingly participating in health care fraud, which is illegal. It may be difficult to prosecute such a case, though, as it would most likely require proving a beneficiary had no intention of using his or her strips. Stephanie Blank, a publicist who represents UnitedHealth Group, responded to the question of legality by saying "there isn't really a good way to know if a member was reselling supplies." A final consideration is that by selling medical supplies, a beneficiary may be unwittingly committing a tax crime by not paying business or sales tax.

Should a person decide to sell test strips, figuring out how doesn't take much effort. In addition to signs on telephone poles that urge passersby to "Sell Your Strips," there are several websites that help people unload their strips, for $20 a 50-strip box in some cases. For a person who received that box through insurance and doesn't plan to use the strips, that can seem like a good deal. It would be, however, a violation of the False Claims Act for companies, such as the ones buying up strips on the Internet, to resell medical supplies that were purchased by Medicare or Medicaid and intended for a particular beneficiary.

Why do the people selling strips have extras? Medicare, with a prescription from a health care provider, generally allows 100 test strips every month to insulin users and 100 strips every three months for people not using insulin. Some people sign up to "autofill" their orders and may get more strips than they choose to use, although Medicare doesn't approve of the practice. Test strips may also get left behind by a deceased family member or be purchased, with the intent to sell, from an estate sale. And some people simply don't test as often as their doctor recommends, leaving them with excess test strips.

Gaming the System

Most insurance plans do allow for increases in the number of strips prescribed when there's a medical need, such as starting a new medication, adjusting doses, or testing during pregnancy. Insurers refer to these requests as "high utilization claims." Private and public insurers typically request documentation from the doctor demonstrating medical need and a record of blood glucose readings to prove the frequency of testing.

"Is it a burden to verify documentation? You bet," says Jerry Meece, RPH, FACA, CDE, director of clinical services at the Plaza Pharmacy and Wellness Center in Gainesville, Texas. "If we are audited, we have to have proof that they were checking [blood glucose] that often. So it's either copying logbooks or downloading meters and printing the results for our files." But his "bottom line" is that turning to the underground market is dangerous.

Many people intend to use the extra strips they receive; others may be ordering strips to purposefully resell them. In 2007, Medicare paid $1.2 billion for test strips and lancets. Based on a recent report by the Office of Inspector General, about $271 million of that total was for high utilization claims. Most of that money—$207 million—was paid without proper documentation, the report says. This suggests that some of these strips may have ended up being resold, with taxpayers footing the bill. Kathryn Ceja, a CMS spokesperson, provided this statement: "Our program integrity investigators look at the quantity of test strips a beneficiary receives over a certain period of time. If Medicare is billed for supplies that exceed this predetermined quantity, CMS would deny the claim and/or conduct a manual review."

Several companies are developing technologies that can automatically send blood glucose readings from a meter to insurers, which could cut down on fraudulent claims if insurers buy into the idea. Would preventing fraud help people with diabetes get cheaper supplies?

"Certainly, fraud and abuse always cost more for any product, from golf clubs to strips," says pharmacist Meece. "I don't know how you gauge the depth of it." What is clear is that cutting down on fraud will help keep people from unwittingly buying bad strips and becoming the victims of a scam.